Advancing Services Export Interests of Least-Developed Countries

Towards GATS Commitments on the Temporary Movement of Natural Persons for the Supply of Low- Skilled Services

by Daniel Crosby

ICTSD Programme on Trade and Services and Sustainable Development Series • Issue Paper 10

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The temporary movement of natural persons in the context of international trade is a crucial issue for Least Developed Countries (LDCs). Indeed, LDCs could successfully satisfy the increasing demand for low-skilled and semi-skilled workers in developed and developing countries. According to Alan Winters (2003) an increase in industrial countries’ quotas for both skilled and unskilled temporary workers equivalent to three percent of their work force would generate an estimated increase in world welfare of more than USD 150 billion a year.
The present Issue Paper (No. 9) on “Advancing Services Export Interests of Least-Developed Countries: Toward GATS Commitments on the Temporary Movement of Natural Persons for the Supply of Low- Skilled and Semi-Skilled Services” by Daniel Crosby, a partner at the Budin & Partners Law Firm, shows how LDC supply of low-skilled and semi-skilled services could successfully respond through the temporary presence of natural persons in developed and developing countries to satisfy the increasing demand for such services in these countries. Moreover, it illustrates where market access should be bound through GATS commitments as well as in other regional and bilateral trade agreements.
Although LDC potential gains in these negotiations are highly relevant for these countries’ long- term development objectives, most developed and developing countries seem reluctant to negotiate either the binding of existing regimes or reductions in trade barriers that inhibit the most important LDCs’ service exports.
Moreover, the overwhelming majority of GATS Mode 4 commitments only apply to highly-skilled professionals. Within this “highly-skilled” category, commitments are linked to Mode 3 establishment, which refers to foreign services suppliers that invest in another Member’s territory have limited rights to bring highly-skilled natural persons temporarily to supply services related to their investment. Currently, thus, GATS commitments are of little economic and social relevance to LDCs since they are not in a position to make Mode 3 types of investments in services.
At a regional and/or bilateral level some countries accord preferential treatment under temporary worker programmes. However, this access is not bound in Members’ commitments under the GATS. Existing temporary worker programmes may though provide useful lessons for the improvement of these mechanisms as well as for a potential ‘multilateralization’ of currently unbounded market access for the supply of low-skilled and semi-skilled services from LDCs.
The purpose of this paper is thus to contribute to a knowledge-based debate in this area on how GATS negotiations, in general, and Mode 4, in particular, can successfully address the competitive advantages and concerns of LDCs. Ultimately, this paper’s objective is to shed light on how potential Mode 4 benefits could effectively be turned into tangible sustainable development results in Least Developed Countries.

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